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As long as a customs officer at Harrods would be an equal opportunity expediter, and not deal solely with Chinese tourists, Michael Ward’s plan sounds like a great idea. A real bargain.
When Michael Ward talks about Harrods he does so in terms of the “customer journey”.
He has been its managing director for the past nine years and has overseen the transition from Mohamed al-Fayed’s mercurial ownership to the £1.5bn ($2.5 billion) purchase of the department store by Qatar Holdings in 2010 and the ensuing £250m ($416.1 million) investment spree.
“We’ve created this unbelievable experience,” he says. “It’s a temple, a palace in Knightsbridge.”
The hyperbole is understandable – sales are up 70pc and the 1m sq ft store is constantly being modernised, with dozens of refurbishment projects under way. In August, the 40,000 sq ft Shoe Heaven will open and the 55,000 sq ft women’s Fashion Lab will be completed.
The secret, he says, is giving customers a memorable shopping experience. “We have the depth of stock, we have knowledgeable sales assistants who really know about the product. That’s what engages the customer. I’m afraid that’s increasingly rare in retail these days.”
But, sipping tea in his top floor office at the Knightsbridge store, in London, he has a less positive customer journey in mind: the experiences endured by too many tourists, especially from China.
It begins with the arduous, time-consuming process of obtaining a visa, including travelling to a biometric testing centre, and ends with the dispiriting experience of queuing at Heathrow to claim back VAT on goods bought in the UK.
“We’ve had people missing their flights because they’ve had to wait more than an hour, and 50pc of all reclaims are given back in pounds, then they have to go to the foreign exchange desk to change their money. We don’t make it a very good experience for them.
“We need to make the experience the most pleasurable it can be. We keep saying Britain’s open for business, let’s mean it. We’ve handed a competitive advantage to our European rivals. If we could get slicker we could beat the French and the Italians.”
Mr Ward has all but given up campaigning against the punitive visa system, which is estimated to cost the UK up to £1.2bn ($2 billion) a year in lost sales from Chinese tourists alone, but he has a novel idea for improving customer experience at the end of a trip.
“I’ve said to the Government I’ll pay for a customs officer to sit in our store so the person doesn’t have to queue when he gets to the airport.” He put the idea to the tourism minister recently and says the response was favourable. Shoppers would be paid back VAT in their local currency, avoiding the need to queue at the airport.
“A lot of the retailers will join forces in this. If we do it, I’m sure our competitors will do it and some of the big hotels.”
He dismisses as “tiny” fears that some tourists might try to cheat the system by selling luxury goods in the UK rather than taking them home.
The growing appetite for luxury in mineral-rich economies with expanding middle classes has been a feature of the luxury goods industry’s success in recent years. Seventy per cent of the high-end luxury market is driven by European manufacturers; 60pc of their output is exported and, in total, the industry accounts for 10pc of all European Union exports.
Mr Ward has recently become president of the European Cultural and Creative Industries Alliance and is campaigning to introduce tougher legislation to protect the industry’s intellectual property rights. He wants protection from breach of trademarks and is fighting attempts to water down protection of intellectual property rights on the internet, or to force manufacturers to prove an infringement has been committed in the country to which goods are being exported as well as in their country of origin.
“We need primary legislation and it’s not going to happen in parliament, it’s going to happen in the EU. Big companies will go after these things, but they need help, not have to prove that in somewhere like Guatemala there has been a trademark infringement. It’s laissez faire gone mad.”
A former finance director at Bassett Foods and the cider business HP Bulmer, and a retail partner at the private equity firm Apax, Yorkshire-born Mr Ward has become one of the luxury industry’s staunchest advocates. “It used to be a dirty word,” he admits, “but this is not about the end product, it’s about the artisans hand-weaving a handbag.”
Earlier this year, plans to develop an international Harrods hotel brand were revealed – might there be a flagship Harrods store in Asia, too?
“Could it happen? Of course. But it’s not going to be easy. Retailers seldom successfully transport British ideas abroad. If Harrods does something it has to be the best of the best.
“We are not worried about the next set of results. Our ultimate goal is making Harrods the finest department store in the world”.